Diversification and multifunctionality in Italy and the
Netherlands:
a comparative analysis
Laura Aguglia
INEA, Italy, e-mail: aguglia@inea.it
Roberto Henke
INEA, Italy, e-mail: henke@inea.it
Krijn Poppe
LEI Wageningen UR, The Netherlands, e-mail: krijn.poppe@wur.nl
Aïde Roest
LEI Wageningen UR, The Netherlands, e-mail: aide.roest@wur.nl
Cristina Salvioni
University of Pescara, Italy, e-mail: salvioni@unich.it
Abstract: Diversification and multifunctionality represent two important adaptation
strategies recently adopted by EU farmers to react to the crisis of the so called
agricultural productivist model. During the last decades these strategies have been
strongly encouraged by the CAP, since they are identified as means to create additional
farm income and enhance the quality of life in rural areas, hence to retain farmers in
business, attract new entrants to agriculture and, more broadly, promoting rural
development.
In this work we focus on the operational classification proposed by Van der Ploeg and
Roep (2003) that define the move towards multifunctionality and diversification in
terms of broadening, deepening and regrounding.
Using the Dutch and Italian FADN data as a source of information, we compare the
diffusion of broadening, deepening and regrounding strategies and explore the farm and
farmer characteristics associated with them in two different EU socio-economic and
agricultural environments: Italy and the Netherlands. Results have shown that farmers
in both countries widely rely on the targeted strategies, but even that diffusion patterns
differ, partly due to the available information.
Keywords: multifunctionality, diversification, agri-food sector.
1. Introduction
The product mix of farms these days is much wider than just food and fibres. Farms
have traditionally tried to cope with the problem of chronic low agricultural income, by
devoting part of the resources available on the farm to off- or on-farm more profitable
activities. For example, the participation of some of the members of the farm household
to off-farm labour market or the activation of direct selling or on-farm processing.
More recently, the adjustment process that farm businesses can activate to react to the
price cost squeeze that is afflicting the agricultural sector has become more complex.
Farms are progressively shifting their resources from the production of traditional crops
and livestock products to that of new products with higher profits, such as agritourism,
quality products, educational and social services. In addition, the new support in favour
of rural development and diversification have opened new opportunities for investments
in non-commodity outputs.
The concept of multifunctionality in agriculture began to take shape in 1992, during the
Earth Summit in Rio, in a historic phase involving profound changes in the position of
the primary sector in the world economy, and the approach to relative support policies
(Van Huylenbroeck et al., 2007). In Europe, the concept was legitimised with the debate
regarding Agenda 2000, mainly as a defence of the EU’s position in WTO negotiations.
In fact, multifunctionality was presented in that context as a specific element of the
European agricultural model, which gave legitimacy to public funding no longer linked
to product quantity, but to the provision of services together with agricultural products
in the strict sense. At the same time, the OECD, in the late ‘90s and early years of the
new decade, undertook a systematic definition of the concept of multifunctionality and
an analysis of various countries’ positions about the use of the term, and its political
valence internationally (OECD, 1998, 2001, 2005).
Since that time, the term has entered the common language of those involved in various
guises in agriculture and rural development, and has acquired different definitions
depending on the context.
The literature refers to agricultural multifunctionality, in its broadest accepted meaning,
according to four types of function: following the Van Huylenbroeck et al. (2007)
categories, these can be grouped as follows: “green” functions (landscape and biodiversity management); “blue” functions (water resource management and flood
control); “yellow” functions (vitality of rural areas, historical and cultural heritage, rural
amenities); and “white” functions (food security and safety).
OECD provides an operating definition of multifunctionality, referring to the primary
sector’s capacity to produce agricultural commodities, coupled – in a certain measure
inevitably – with “non-commodity outputs”. In particular, according to the OECD, the
key elements for defining multifunctionality are: 1) the existence of multiple
commodity and non-commodity outputs produced jointly by agriculture; and 2) the fact
that some of the non-commodity outputs feature the characteristics of externalities or
public goods, with the result that markets for these goods do not exist or function
poorly.
The aim of this paper is to provide a quantification of the importance of diversification
and multifunctionality at the farm level in two EU countries. To do this we apply the
operational classification recently proposed by Van der Ploeg and Roep (2003) in terms
of broadening, deepening and regrounding, later defined in detail. The analysis is
intended not only to compare the diversification pathways followed by the two
countries, but even to highlight the revision needed to adapt farm surveys such as
FADN, originally designed to monitor a productivist agriculture, to the complex postproductivist reality of farm businesses in these days.
2. Multifunctionality, diversification and pluriactivity
2.1 Some definitions
Before analysing the evolution of multifunctionality, it is useful to clarify the distinction
between this concept and those of diversification and pluriactivity. In fact, though the
literature often uses these three terms as synonyms, partly because of the many ways
their definitions overlap, they refer nonetheless to distinct phenomena, summed up as
follows and as discussed in the following pages.
Table 1: Definition of the phenomenon
Concept
Unit of
analysis
Multifunctionality Agriculture
/ Farm
Diversification
Pluriactivity
Definition
Use of the farm’s resources for agricultural
production and non-market outputs (e.g. landscape,
organic products, quality products, on-site
conservation of bio-diversity, etc.)
Rural
Use of the business’ resources for agricultural and
business
non-agricultural production (e.g. photovoltaic
(agricultural energy, rural tourism, etc.)
and non-)
Family
Use of family resources on or off the farm.
household
In this paper, the concept of multifunctionality originates from the OECD definition of
the (jointly produced) public goods. This definition and the categories labelled by Van
Huylenbroeck (2007) suggest that multifunctionality is a characteristic of the
agricultural system in a certain rural area or region, and not necessarily of an individual
farm. This is most clear in public goods like landscape, which are defined on the level
of (certain parts of) Tuscany or the Beemster (a Dutch polder on the Unesco Heritage
list).
There is more than pure private and pure public goods. Table 2 uses the concepts of
non-rivalry and exclusion to show that there are two intermediate forms. Common
goods where rivalry exists but exclusion is not possible; common fish grounds or water
systems are classic examples. And quasi-public goods, where exclusion is possible, but
rivalry does not exists. Landscape is a classic one: persons can be asked a fee to enter a
region, but as long as the area is not overcrowded, the visit of one person does not
reduce the possibilities of another to experience the landscape.
Table 2: A typology of goods
Non-rivalry goods and services
(indivisible)
Impossibility
of
exclusion or
rejection
Rivalry goods and services
(divisible)
(1) Pure public goods
(2) Common goods
open space / rest / biodiversity /
natural habitat / cultural heritage
ground and surface water /
fish in the ocean, rivers and
Possibility
of exclusion
or rejection
(3) Quasi public goods
nature / landscape
canals / wildlife
(4) Pure individual goods
agricultural products /
agricultural tourism / health
care farms
Source: Salverda et al, based on Van Huylenbroeck and Slangen (2003)
The four types of goods as described in table 2 suggest that there are possibilities for
governments to ensure the production of public goods by private parties such as
farmers. This is the case for public goods, where governments can hand out contracts or
pay subsidies to promote the provision of such goods. But it is even more the case with
common goods and quasi public goods where also producers themselves have options to
organise themselves. Slangen (2008) for instance suggests on basis of the club theory
that cooperatives can play a role in landscape provision. A nature or landscape
cooperative can reduce transaction costs in a contract with the government and can
improve the blending of pure individual goods (e.g. milk production) with quasi-public
goods (e.g. access to land for hikers or cows in the meadow) at a regional level. Such
farm groups might also create common goods (from web sites to joint facilities) that
help them to reap the benefits of multifunctionality.
The coordination mechanisms available can also be classified in four types (figure 1):
the invisible hand for the market, the visible hand within a hierarchy, the handshake
(trust, shared mission and objectives), and the handbook (the contract with detailed
instructions). In reality institutional arrangements are often a combination of the
coordination mechanisms: also a contract asks for some common values (in contract
handling for instance and contracts are per definition incomplete). The message here is
that the different coordination mechanisms provide incentives to preserve or enhance
the multifunctionality aspect of agriculture.
In cases where this is done, multifunctionality becomes observable at the farm level and
is reflected in farm accounts. As we will show in this paper, this makes it also possible
to provide data on the level of engagement of farms in multifunctionality at the level of
a region. It should be noted however that this does not measure the multifunctionality of
a region: that can be much higher, especially if the visible hand is the coordination
mechanism for public goods (meaning that this is done by the government itself) and
that the handshake (common values and norms on farming) guarantees common goods,
without much payments or contracts.
Figure 1: 4 types of coordination mechanisms
“Handshake”
- Mutual
adjustment
- Reciprocity
- Common values
and norms
“Invisible hand”
- Price
Coordination
“Visible hand”
- Authority
- Direct supervision
“Handbook”
- Rules
- Directives
- Safeguards
Source: Salverda et al, 2009, based on Borgen and Hegrenes (2005)
2.2 Information for decision making
To coordinate decision making in multifunctionality, farmers need incentives. In
particular, let us use the hypothesis that farmers decide whether to use their available
resources for monofunctional production – with the sole objective of agricultural
production – or for multifunctional production, with more than one product jointly,
some of which have externality characteristics. In the first case, production activity can
lead incidentally to creating some externalities (environmental or socio-economic), but
in amounts not planned and controlled by the farmer, since potential associated costs
and benefits are not included in the set of values considered in farm decision-making. In
the second case, farmers become multifunctional, since they recognise potential
economies of scope1 in joint production of two or more products, or because they can
see economic value2 in possible non-market output produced jointly with agricultural
products, a value used in deciding how to maximise the farm’s private benefits.
Recognition of the economic value of externalities produced by multifunctional
agriculture may occur, for example, following awareness campaigns showing how
market rewards quality and environmental characteristics of products (organic,
integrated agriculture, traditional or local products), compared to the price of
conventional products; or with the granting of public support designed to optimise
production of externalities (as with agri-environmental measures). Whatever the process
is of identifying and measuring the economic benefit associated with multifunctional
production, farmers may use this information to allocate farm resources efficiently, to
create a combination of agricultural and non-agricultural products that will maximise
private benefit, and at the same time guarantee an adequate supply of public goods.
Thus, multifunctionality can be a rational economic choice, not necessarily guided by
sensitivity for the natural environment or other non-economic considerations. Farmers’
sensitivity to nature conservation or local cultural heritage may be a stimulus factor for
adopting multifunctional practices, but it is not in itself sufficient to justify choosing
multifunctionality, and especially cannot guarantee the economic sustainability of that
choice over time. To successfully produce and sell an organic product, or a local
1
When joint production of two or more products it becomes more economical than producing them
separately, this is economy of scope.
2
This value can be approximated, for example, from the price differential obtained for a quality or
organic product, or from official financial support received for conserving the rural landscape or biodiversity.
traditional product or a service, as happens with social agriculture3, farmers must be
prepared to take the risk of often very specific investments that are consequently
difficult to reverse (non-recoverable costs). Moreover, they must know how to move in
a complex, little known (niche) market and often distant from potential customers. All
this implies certification and advertising costs, but also real transaction costs associated
with looking for sales and communication channels with potential customers. In other
words, multifunctionality involves a very complex cost-benefit analysis, for farmers to
be able to identify and measure the economic value of potential external and indirect
benefits, as well as various kinds of costs that may arise from choosing
multifunctionality.
These considerations clearly show that choosing multifunctionality is not to be viewed
solely as a strategy for survival, the exclusive prerogative of marginal, small or
residential farms. Indeed, when a farm identifies the economic value of the benefits of
multifunctionality, and internalises them in the production planning process, the
adoption of MPs (multifunctional practices) becomes part of a series of competitive
strategy options for any type or size of farm.
2.3 Diversification and pluriactivity
The concept of diversification also refers to the farm as a unit of analysis, but here the
unit may gradually depart from its original “agricultural” nature, toward nonagricultural but rural activity. In the extreme, this unit of analysis may lose all
agricultural connotations and be identified because of its territorial location as “rural”.
In other words, a business with land as a resource, as well as labour and capital, which
also makes it suitable for agricultural production. In any case, land and other resources
may be used to produce non-agricultural goods and services, such as rural tourism or
energy production (photovoltaic and wind-powered for example) or conservation of the
environment and natural resources4. In this case as well, sensible farmers will base their
decision on the combination of agricultural and non-agricultural products, to maximise
their private benefits. The optimum combination, and then the degree of diversification
and eventual specialisation, are derived from the ratio between the prices of producible
goods, given the existing combination of resources and technology5.
The polar cases of specialisation are represented on one hand by a multi or
monofunctional farm (all resources dedicated exclusively to crops and livestock, and
possible externalities obtained jointly) and on the other by a farm devoted to nonagricultural products (total de-activation of agricultural function). In fact, diversification
can be interpreted as broadening the range of production possibilities of a business that
was originally agricultural.
Finally, the concept of pluriactivity is different from the two preceding concepts, in that
the unit of analysis is no longer the farm but the farmer’s family or household
(Saraceno, 1985). Pluriactivity refers to cases where, after evaluating the advantages of
3
Social agriculture refers to a primary activity designed to provide social services, like training, therapy
and education (see, for example, Pascale (2005) and Senni (2007).
4
In this case, the environmental function replaces the agricultural, unlike multifunctionality where nature
conservation occurs jointly with production of market outputs. In the first case, for example, think of a
wildlife farm or nature reserve (private). Multifunctional farms are those that produce agricultural
varieties in danger of extinction.
5
Or of the economic value in the case of production of non-market goods, as in the case of a private
nature reserve subsidised by the public sector.
family labour inside and outside the business, one or more family members (thus part of
the family’s available labour resource, but not necessarily of the farm or rural business)
work outside the business (in agricultural or non-agricultural activities, as dependent or
independent workers). The choice to work off the farm may be interpreted, as shown by
household models, as the result of a maximisation process of family income – given as
the sum of on farm and off farm family income produced by a family.
3. Broadening, deepening and regrounding
According to Van der Ploeg and Roep (2003), the process of farm transformation moves
along 3 distinct trends: a deepening of agricultural production, a broadening of
functions activated by farms and a regrounding of farm processes.
In the first case, farms differentiate their productive potential by moving toward
agricultural goods with unconventional characteristics (organic products, quality
products, typical products, etc.), or by moving along the supply chain, acquiring
functions down the line from production (direct sales, etc.).
Broadening involves a process of expanding income-producing activities, some of
which can also be completely independent of real agricultural production, by exploiting
entrepreneurial activities in a rural context wider than strictly agricultural (rural tourism,
landscape management, therapy farms, as well as new organisational forms with
services managed by persons other than the farmer or agricultural entrepreneur)6.
Regrounding refers to those cases in which some production factors, labour in
particular, are devoted to activities outside the farm. The regrounding category contains
pluriactivity and those cases which the anglo-saxon literature refers to as economical
farming, that are those cases in which production costs are reduced , hence the
autonomy of the farm is increased, by replacing internal to external inputs. Working
outside the farm and reducing production costs have in common that the inputs in the
farm activity are reduced.
A strong trend towards deepening of primary activities lead to a farm that differentiates
its product by favouring, directly and indirectly, production of positive externalities. A
strong process of broadening produces externalities, but leads to a kind of farm that may
also gradually reduce or eliminate its original primary activity entirely. In this sense,
broadening may lead to a diversification of the agricultural sector. Regrounding refers
to a reallocation of production factors within the farm, but its main analysis unit, at least
for pluriactivity, is not the farm in itself, rather the family. However, regrounding
affects also the multifunctional activity of farms: on one side pluriactivity implies less
time to devote to other practices (because family members are involved in other nonagricultural, sometimes non-rural activities); on the other hand, the proximity of
pluriactive farms with urban centres give farms the possibility of specialising in services
demanded by citizens and increasingly supplied by farms (such as recreational services,
therapy services, didactic services, and so on). Given this picture, in reality what
happens more frequently on farms is a combination of deepening, broadening and
regrounding, which identifies various levels of multifunctionality.
6
In this regard, see also the work of Oostindie, Renting (2005), part of the Multagri research project (6th
Framework Research Programme of the European Commission).
Based on the different combination of deepening and broadening, EU Member States
have been classified according to how farm income changes (Van der Ploeg and Roep,
2003): in Italy, for example, it is estimated that around 8% of value added comes from
deepening and broadening, while in Germany this figure is over 15%, and in Spain less
than 5%. With reference to the percentage of farms involved, in Italy over 30% of
farmers engage in deepening, and roughly 6% in broadening, whereas in Ireland the
situation is reversed, with 33% of farmers oriented toward broadening and less than 5%
toward deepening.
4. Multifunctional and diversification practices in Italy and the
Netherlands
4.1 Main features of Italian agriculture
Italian geography is characterized by the prevalence of hilly and mountainous areas: out
of a total land area of 30 million hectares, only 23% is made up of plains. UAA
accounts for 12.6 million hectares, around 71% of the TAA and around 42% of the total
surface.
4.1.1 Structural and economic aspects of Italian farms
In Italy in 2005 there are 1,706,773 farms, with an average UAA around 7.4 hectares,
generating a total gross margin (SGM) of around 22 million European Size Units
(ESU). The ratio between total SGM and number of farms generates an ESU in average
of 12.77. Out of the total units, 86% are specialized farms. 48.9% of the national total
are represented by permanent crops, followed by 25.5% of arable crops and by 9.3% of
herbivorous livestock. Specialized farms are widespread in all Italian regions: the
highest percentage is found in Trentino Alto Adige (95.5%) in the North of Italy,
followed by Puglia (94%), in the South of Italy, while the the lowest percentage is
found in Umbria (Centre of Italy), with 71.4%.
Farms employ around 1.2 million of working units (AWU), with a strong prevalence of
family work (84.9%), reflecting the fact that most of farms are individual and counting
on family work. 11.3% is represented by short-term contracts, linked to seasonal needs,
while 3.5% only is represented by permanent contracts. This aspect highlights the high
flexibility in employment in the agricultural sector.
Looking at the relationship between land use to the farm size (ESU), note that arable
crops predominate irrespective of economic size; the two less profitable farm sizes (less
than 4 ESU and between 4 and 16) are specialised in permanent crops, while the most
profitable category (16 and over) is specialised in permanent grasslands and pastures.
Comparing data on farm size in the period 2000-2005, they register a steady increase in
all geographical macro-regions, even if differences are still stand among North (10.1
ha), Centre (8.3 ha) and South (5.8 ha).
Another interesting link is that between the economic size and the age of farmers. It
seems confirmed that older farmers run less profitable farms. Farms less than 4 ESU
sum up only to 27.3% of farms operated by farmers between the age of 16 and 24, with
the highest concentration falling in the category of 65 years and over; on the contrary,
younger farmers are concentrated in larger farms, from 16 ESU and over.
In terms of agricultural output, data available for 2006 underline that the sectors with
the highest share of the total are livestock, field crops and tree crops, with values
ranging between 13 and 14 million euro. More in details, meat represents 20% of total
output, vegetables 16%, milk 9.7% and fruit and citrus 9%.
Among main vegetable and fruit output, the first four main products in value (between
2,000 and 1,000 million euro) are: olive oil, wine, hybrid maize and tomatoes.
4.1.2 Multifunctionality in Italian Farms
10.7% of total farms produces for its own consumption; on the contrary, multifunctional
farms, as trecorded buy he official statistics, are relevant in terms of units (10.3%),
AWU (17.7%), output (25.4%) and value added (23.8%)7. Multifunctional farms are
more widespread in the South (around 41%), with a small or medium ESU and in
general with one extra-agricultural activity. There is a direct proportion between the
degree of multifunctionality (in terms of number of additional activities) and the size.
The most representative activities are on-farm vegetal and animal product processing
and agritourism.
The picture emerging from data suggests that Italian agriculture is mainly characterised
by small size specialized farms, directly managed by individual farmers, most of them
over 65 years, with the support of the family, and temporarily supported by extra-family
seasonal workers. Land is mainly devoted to permanent crops, wine, olive, fruit, high
productive crops, thus identifying the traditional Mediterranean production, however the
small size of farms hardly allows to reach profitable results. Exception to this pattern is
identified by large farms with permanent grasslands and pastures, managed by young
farmers. Moreover, Italian agriculture has a significant percentage of multifunctional
farms, where other related activities are developed. Likely due to the richness of the
territory in terms of natural resources, landscape and history, traditional agricultural
activity strongly and easily succeed in connecting products and food to tourism, sport
activities, farmer markets, and other diversification activities.
4.2 Main features of Dutch agriculture
The Netherlands is a relatively small country with a high density of population (even
above 400 persons per square kilometre). The geographic conditions, along the sea with
big ports for transports worldwide and some rivers for transports into Europe, are a
stimulus for international trade. Natural conditions – a mild climate, fertile soils in a flat
landscape and the availability of water – are important positive factors for a variety of
agricultural activities. The combination of these two (geographic and natural) factors,
amongst others, results in an intensive agricultural production sector.
The geography of the Netherlands is characterized by the prevalence of flat areas. A
large part of the land is even below sea level. UAA accounts for 1.9 million hectares,
around 50% of the TAA (including water) and around 60% of the total country surface.
4.2.1 Structure of the farm sector
7
Multifunctional farms in statistical data collected are those with activities different from agriculture and
cattle, but related to the sector and employing farm resources or products. These activities refer to
agritourism, handicraft, on farm processing of vegetal and animal products, renewable energy production,
contracts work.
Agriculture (including horticulture) in the Netherlands consists of some 80,000 farms
with some 200,000 persons working on it. Most of the farms are family farms; this
means that the farmer and his family own the farm and do most of the work. A relative
small part of all farms, most the holdings in horticulture, have (non family) salaried
persons.
The UAA is on average nearly 25 hectares per farm. Farms together generate a total
gross margin (SGM) of around 7 million European Size Units (ESU). The average size
of farms is around 85 ESU. About 88% of the farms are specialized farms.
To achieve an acceptable income on the restricted surface farmers and breeders have
specialized and intensified their production during the last decades. This process of
specialization and intensification was necessary moreover because of the high prices
and costs of land and labour. In this process farmers have been inclined to invest in
increasing the scale of production and bringing downward the costs of production.
Farms and holdings specialized on products with a minimum of land to be used in the
production process became more important in the Dutch agro-sector during the last
decades. This means for instance that:
 The production of pigs, poultry meat (broilers) and eggs is mainly concentrated
on the around 6.000 specialized farms. These farms have a small surface of land
(average some 6 hectares). These livestock farmers mainly use compound feeds
(with cereals and other ingredients) as well as byproducts of the food industries
as feed.
 The production of (most) vegetables, flowers and ornamental plants is located
on around 6,000 holdings (average 1.5 - 2 hectare) with “greenhouse”’, which
are warmed with the use of mainly natural gas.
 The around 8,000 horticulture holdings with “open field crops” (e.g. vegetables,
fruits, flower bulbs and nursery plants) have with on average some 15 hectares
of land also an intensive way of production.
 The around 20,000 dairy farmers (average around 40 ha and 65 dairy cows per
farm) are rather intensive in their production with a production level above
10,000 kg per hectare. They also make use of compound feeds and byproducts.
They use these products in combination with feeding stuffs (grass, silage of
green maize etc.) produced on their own land to achieve a high level of milk
production per cow (around 8,000 kg).
 Besides the specialized dairy farmers some 20,000 other grazing livestock
farms, mainly with beef cattle, young cattle, sheep, goats and horses, are active.
 The around 12,000 specialized arable farmers (average around 40 ha) are for a
large part specialized on “high value crops” as for instance ware and seed
potatoes, vegetables and sugar beet. On most of these farms the use of land for
“extensive, low value” crops as cereals and oils seeds is brought at a minimum
level.
Dairy farms are found in all regions (with some concentrations in regions with low peat
soils), arable farms mainly in regions with clay soils, intensive livestock farms mainly
in the regions with sandy soils (central, south and east parts of the land), glass house
holdings mainly near the sea (the have a profit of extra sun light). Open field
horticulture holdings are found in different regions, with some concentrations, e.g.
flower bulbs in the provinces along the sea.
Arable crops represent some 10% of the value of agricultural products (total value some
22-23 billion Euro per year, including agricultural services), horticulture crops around
40% and animal products around 50%. The main individual product of the Dutch
agriculture sector is milk, with a value of around 3.5 Billion Euro. The main arable crop
is potatoes for human consumption, seed or production of starch; it represents around
50% of the production value of arable crops. In horticulture the value of ornamental
products, including flowers (e.g. roses), bulbs (e.g. tulips), plants and trees, consists
about 70% of production value. Thus, such production has a much higher value than the
production of vegetables (e.g. tomatoes, cucumbers) and fruits (mainly apples and
pears).
Structural development in agriculture shows an enlargement in the average size of farms
over the years (figure 2). The number of farms is decreasing with some 3% per year.
But this decreasing number of farms generates over the years a growing volume of
products; in fact in the last decade mainly the volume of production in horticulture has
grown.
Figure 2: Number of farms divided in classes of size units, 1980 -2008
50000
45000
< 16 nge
16-40 nge
40000
40-70 nge
35000
70-100 nge
30000
100-150 nge
>= 150 nge
25000
20000
15000
10000
5000
0
1980
1995
2008
Source: Statistics Netherlands, farm census, LEI. Nge (Dutch size units) are conceptually equivalent to
European Size Units
In the coming years the number of farms will fall further. Smaller farms have a higher
percentage older farmers (figure 3, left bars). The number of farmers older than 50 years
with a successor on average is (only) about 30%. Smaller farms have a lower percentage
successors (figure 3, right bars). The reason for this is, in general, the lower level of
income of smaller farms. Smaller farms are more depended of income outside the farm
(external income) than larger farms. For a large part this external income consists of
salaries for labour outside the farm of the farmer and the partner.
Figure 3: Percentage of farms per size class (Dutch size units, nge) with an
entrepreneur/owner being older than 50 years with (right bar) and without
(left bar in blue) a successor, 2008
80
%
% >= 50 jaar
70
% met opvolger
60
50
40
30
20
10
0
< 16
16-40
40-70
70-100
100-150
>= 150
bedrijfsomvang (nge)
Source: Statistics Netherlands, farm census, LEI.
4.2.2 Multifunctional activities according to the Dutch agricultural census
Some 16.000 or approximately 20% of all farms (including horticulture holdings) has
multifunctional activities on the farm, including management of nature and landscape,
agritourism, provision of care or education, on farm processing of vegetal and animal
products, renewable energy production, contracts work. On some farms more
multifunctional activities are found. Most multifunctional farms are dairy and other
grazing livestock farms, as well as arable and mixed farms. Intensive livestock farms
and horticulture holdings are relatively less active in the field of multifunctional
activities.
On management of nature and landscape some 10.000 farmers are active; in the field of
recreation and agritourism some 2.500 and on the field of care of handicapped and older
persons as well as children some 800 farms. The social activities on farms is the
growing sector in the Netherlands.
Farms with multifunctional activities are found in all regions of the Netherlands, for a
part around the (larger) cities as well as in regions with specific values on nature and
landscape. The size of the farms with multifunctional activities is rather varied.
However the smallest farms, less than 16 ESU, as well as the larger farms (above 150
ESU) are less active in this field. The larger farms are for larger part horticulture
holdings (glass houses), the smallest farms for a larger part other grazing livestock
farms.
5. Diversification and multifunctionality in the Italian FADN
Empirical analyses of diversification and multifunctionality suffer from the scarce
availability of statistical information. Data about multifunctional practices (MP) are
often available only on an aggregate level, apart from ad hoc surveys which are often
limited to some territorial areas and are not repeated over time.
5.1 Pros and Cons
At present, the FADN is the only micro-database systematically gathered and national
in scope, which, besides containing information at the farm level about structures,
production and economic results, contains a set of information about farmers’ decisions
to provide products and services beyond the primary function. As a result, for example
the FADN allows the application of behavioural models to estimate the choice of
adoption of multifunctional practices (Esposti, Finocchio, 2008; Aguglia, Henke,
Salvioni, 2009).
The Italian FADN
Recall further that, as of 2003, the Italian FADN survey is no longer conducted on a
“voluntary sample”, but on one that is “statistically representative”. In particular, the
field of observation is the population of commercial farms8, that is of the farms of more
than 4 ESU (equal to 4,800 euro). Further, the sample is stratified9 according to criteria
of geographical region, economic size (ESU) and farm type (FT), and is randomly
drawn from the ISTAT census10.
The Italian FADN sample is fixed at 17,000 farms (commercial) by a specific EC
regulation (Reg. (EC) 60/1997). As the sample is random, it is possible to extend the
results from sample to universe, using statistical inference tools defined by applying the
weighting calculated by ISTAT for each stratum of the sample, shown as the ratio N/n,
where N is the number of farms in the universe and n is the number of farms in the
corresponding stratum of the observed sample.
In the works presented in the following sections and chapters, the sample used was from
2006.
The amount of information collected on non agricultural activities run by the farm-firm
is in some way limited by the original “productivist” design of the survey. The FADN is
continuously evolving in order to meet the new demands from analysts and politicians.
5.2 Information available
The FADN survey provides information revealing the presence of MPs, associated with
both environmental and socio-economic functions.
For the former, FADN provides information about the
 use of organic farming,
 use of low-impact techniques,
 production of landscape conservation services,
 production of bio-diversity conservation services,
 use of practices that encourage extended production.
While information about the last three MPs is only available for participation in agrienvironmental programmes within Rural Development Programs11 of the PAC,
8
A commercial farm is defined as a farm which is large enough to provide a main activity for the farmer
and a level of income sufficient to support his or her family. In practical terms, in order to be classified as
commercial, a farm must exceed a minimum economic size, expressed in terms of Gross Standard Margin
(GSM).
9
La stratificazione che permette di incrementare l'efficienza di campionamento, minimizzando il numero
di aziende da campionare necessarie per rappresentare la varietà del campo di osservazione.
10
Stratification allows greater sample efficiency, minimising the number of sample farms required to
represent the variety in the field of observation.
11
Participation information is given as receipt of environmental premium.
information for adoption of low-impact and organic production goes beyond mere
participation in public programmes. For organic practices, it is possible to have
information on farms’ certification of organic processes and/or products. For lowimpact techniques, information refers to farms’ self-certification.
In addition to these indications, FADN provides information about MPs producing
socio-economic externalities, especially at the local level. For example, it is possible to
know
 if the farm offers touristic services (farm stay, meals, etc.) services,
 uses designation of origin and protected geographical indication (PDOs, PGIs),
 produces traditional products.
Finally, the survey provides indications about more traditional forms of diversification
such as:
 direct selling;
 on-farm processing;
 renting machinery;
 leasing of land;
whereas information is not currently available about energy production and the
provision of social and therapeutic services12.
On the whole, the FADN survey appears to be more suited to measuring deepening
rather than broadening. This result is expected, given the survey’s original purpose
focussed mainly on characteristic management of agricultural enterprises. As for the regrounding category, the FADN features the presence of pluriactivity in the household,
whereas it does not provide any indicator of the so-called “economical farming”
behaviour.
Summing up, multifunctional practices considered in this work are those shown in the
following table.
Table 3: Multifunctional practices in the FADN data base
Indicator of multifunctional practice
Broadening Deepening Regrounding
Organic process/product certification
X
Use of low-impact production methods
X
Certification of origin
X
Traditional products
X
Direct sales
X
Extensification
X
Agritourism/farm stays
X
Landscape conservation
X
Biodiversity conservation
X
Renting machinery
X
Leasing of land
X
On farm processing
X
Pluriactivity
X
12
In this regard, note that the FADN questionnaire has been re-formulated to survey this information in
future.
Table 4 describes the diffusion of the 3 strategies (broadening, deepening and
regrounding) among Italian farms, with a focus on family farms. This latter group
represent 99.23% of total Italian farms. It is quite evident, in fact, that frequencies of
adoption of different targeted strategies by family farms follow the same pattern of the
whole farm population.
In terms of frequencies, the most diffused multifunctional strategies are those of the
deepening type, with more than 81% of total farms, while the broadening ones reach
only 40% of total farms. Note that data collected refer to the main activity, but in many
cases a single farm may activate more than one strategy at a time and that’s the reason
why the 3 strategies don’t sum up to 100%. Within the deepening, the most adopted
activities are on-farm processing and direct sale, maybe due to the possibility to use
internal resources quite easily, compared to the knowledge and high costs required by
for example a certification (organic or quality products).
Table 4: Diffusion of broadening, deepening and regrounding strategies in Italian
farms, 2006
Italian Farms
Total
BROADENING*
Agri-tourism
% of the
% on
of which
% of the
% on
category on each own family
category on each own
total farms cathegory farms
family farms cathegory
263,528
37.23
100
261,558
37.24
100
12,789
1.81
4.51
12,538
1.79
4.46
Landscape conservation
4,266
0.6
1.50
4,228
0.60
1.50
Biodiversity conservation
1,957
0.28
0.69
1,956
0.28
0.70
23,536
3.33
8.30
23,295
3.32
8.28
238,701
33.73
84.18
236,973
33.74
84.25
2,305
0.33
0.81
2,286
0.33
0.81
DEEPENING*
335,233
47.36
100
333,249
47.45
100
Direct sales
Renting machinery
Leasing of land
Temporary leasing
161,235
22.78
27.97
160,363
22.83
28.01
Certification of origin PDO
71,482
10.1
12.40
70,573
10.05
12.33
Organic farming
29,567
4.18
5.13
29,341
4.18
5.13
Low impact farming
39,556
5.59
6.86
39,182
5.58
6.84
8,816
1.25
1.53
8,816
1.26
1.54
265,765
37.55
46.11
264,170
37.61
46.15
298,542
42.51
Extensification
On farm processing
REGROUNDING
Pluriactivity
Total farms
707,776
100
702,360
99.23
* Totals and percentages per category refer to the number of farms in which at least one practice has
been activated. As a consequence they differ from the sum of the column.
Source: calculations on Italian FADN, 2006.
Among broadening strategies, the leasing of land has a very relevant weight (84% of
total farms with broadening activities).
Pluriactivity, a strategy that can be applied on family farms only, is quite diffused. More
precisely the survey records some source of extra-farming, agricultural and non, income
in the 42.5% of total family farms.
The structural and economic characteristics of conventional and multifunctional farms
are shown in Table 5.
Table 5: Characteristics associated to conventional and multifunctional farms in Italy
Conventional
non fam.
Tot_land
80.1
Tot_used_l~d
63.53
Tot_AWU
4.09
fam_AWU
0.67
0.16
ESU
6.81
cond11
0.56
cond12
0.37
lf_sole
0
lf_partner
0
lf_corp
0.3
lf_other
0.7
circ0
0.34
circ3
0.15
circ4
0.51
upland
0.05
hill
0.23
flatland
0.72
ft_cop
0.19
ft_hor
0.07
ft_wine
0.02
ft_fruit
0.17
ft_oliv
0
ote_latte
0.03
farm_net_i~e
125962.86
Hh_indep_l~e
0.03
Hh_dep_lab~e
0.15
Hh_pensions
0.16
Hh_capital~e
0
rf_ulf
fam.
12.79
11.14
1.23
1
0.81
5.22
0.94
0.05
0.96
0.04
0
0
0.42
0.13
0.46
0.13
0.41
0.45
0.23
0.06
0.09
0.19
0.03
0.05
14829.49
0
0
0.32
0.01
4409.7
Deepening
non fam.
97.46
64.41
3.6
0.63
0.18
6.56
0.3
0.58
0
0
0.63
0.37
0.23
0.53
0.25
0.17
0.65
0.18
0.11
0
0.1
0.06
0.34
0.06
46885.19
0.13
0.1
0.18
Broadening
Pluriactive
fam.
non fam.
fam.
fam.
16.78
13.16
158.36
27.16
14.29
10.9
109.37
23.79
1.2
1.58
0.91
4.79
1.01
1.28
0.75
0.88
0.18
0.81
0.84
0.82
5.11
4.85
7.72
6.06
0.96
0.41
0.95
0.96
0.03
0.45
0.04
0.03
0.97
0
0.92
0.97
0.03
0
0.03
0.08
0
0.36
0
0
0
0.64
0
0
0.2
0.28
0.45
0.49
0.24
0.21
0.13
0.29
0.51
0.31
0.29
0.59
0.15
0.28
0.19
0.13
0.33
0.43
0.43
0.6
0.24
0.39
0.38
0.44
0.09
0.22
0.19
0.14
0.02
0.05
0.03
0.03
0.09
0.07
0.05
0.11
0.06
0.02
0.07
0.11
0.2
0
0.05
0.18
0.06
0.04
0.14
0.14
13968.48 182478.59 26882.73
6879.67
0.08
0.1
0.06
0.37
0.18
0
0.1
0.69
0.3
0.19
0.22
0.34
0.01
0.01
0.03
7140.48
402.26
9029.3
Conventional family and non family farms are characterized by large physical and
economic (ESU) dimension in all the groups. It is interesting to note that the
conventional non family farms have the smallest average number of hectares (UAA)
among the targeted groups. In terms of location, they are relatively more present in the
Southern regions (circ4) and in the plains.
In terms of production, they tend to be more specialized in horticultural and fruit
production. Farms using deepening strategies are on average slightly larger than their
conventional colleagues. The large diffusion in central regions, in hilly areas as well as
the higher presence of corporations in this group are most likely linked to the higher
specialization in wine and olive sectors, two industrialized productions when speaking
in terms of quality products, (PDO). The non family farms using deepening strategies
are relatively less diffused in Southern regions; in addition they are characterized by the
highest family to total labour units ratio. Farms making use of broadening strategies are
the largest among the targeted groups either in terms of hectares and in economic terms.
It is interesting to note that in the sub-group of family farms the sole ownership is
relatively less frequent among these farms, while “other non corporate” legal status are
more frequent. They are particularly diffused in Northern regions and in the uplands and
they hare relatively more specialized than the other groups of farms in livestock and
dairy production. They show the best economics results, it is particularly interesting to
note that the family farm income per unit of family labour is the highest among the
groups.
The pluriactive family farms appear to be the weakest of the targeted categories. As for
the structures (physical and economic dimension, altimetry, legal status) they are closer
to the conventional farms than to the two other multifunctional groups. They are small
farms, particularly diffused in the southern regions, relatively more specialized in olive
growing with young and female holders. The economic results of these farms are very
poor, especially the family farm income per unit of family labour (that is the net farm
income that can be distributed among the family workers) is very low. It is difficult to
say on the basis of these informations if they are hobby or limited resource, inefficient
farms. In hobby farms the poor economic results may not be a problem, given their
involvement in agriculture is justified mainly by non economical (e.g. residential)
considerations. Whereas in the case of limited resources farms the poor economic
results are a symptom of poverty and inefficiency.
6. Diversification and multifunctionality in the Dutch FADN
Table 6 describes the diffusion of the three strategies (broadening, deepening and
regrounding) among Dutch farms, with the details for family farms. This latter group
represents a large majority, 97.81%, of total Dutch farms. Table 7 shows the frequencies
of adoption of different targeted strategies by family farms following the same pattern
of the whole farm population.
The most prevalent multifunctional strategy is that of broadening, with more than 66%
of the total number of farms, compared with 19% of deepening. Note that the data
collected refer to the main activity, but in many cases a farm is active in more than one
strategy at a time and because of this the three strategies together count for more than
100%. Within broadening, the most adopted activities by farms are contract work and
leasing of land. In the Netherlands this is not always seen as a multifunctional activity
amongst farmers, but in the definition of Van der Ploeg it is part of broadening the
incomes of the farm. Leasing land is often seen in combinations of dairy and arable
farming to rotate different types of crops, grass and arable crops, to maintain the fertility
of the land. Within deepening, the direct sale of unprocessed products is the most
adopted activity. This activity can be done on a small scale and doesn’t require much
labour. Some farmers present their products along the road without surveillance. Almost
half of all the farms have off farm incomes through labour. This means that only 14% of
the farms can be seen as conventional farms.
Table 6: Diffusion of broadening, deepening and regrounding strategies in Dutch
farms, 2007
Dutch Farms
% of the
category
% on each
on total
own
farms
category
Total
BROADENING
of which
Family
farms
% of the
category
on family
farms
% on each
own
category
40,002
66.47
100
39,470
67.05
100
Agri-tourism total
5,296
8.80
13.24
5,246
8.91
13.29
Accommodation
2,073
3.44
5.18
2,073
3.52
5.25
Excursions
1,476
2.45
3.69
1,426
2.42
3.61
Restoration
389
0.65
0.97
389
0.66
0.99
Sports
688
1.14
1.72
688
1.17
1.74
1,811
3.01
4.53
1,811
3.08
4.59
14,548
24.17
36.37
14,470
24.58
36.66
Storage
(nature conservation)
Landscape conservation
Biodiversity
conservation
Renting machinery
(contract work)
Leasing of land
Temporary leasing
Green care
Energy
DEEPENING
Direct sales
unprocessed products
Direct sales processed
products
On farm processing
Certification of origin
PDO
Organic farming
Low impact farming
Extensification
-
-
17,207
28.59
43.02
17,138
29.11
43.42
22,852
37.97
57.13
22,478
38.18
56.95
-
-
516
0.86
1.29
516
0.88
1.31
1,091
1.81
2.73
1,016
1.73
2.57
11,224
18.65
100
10,964
18.63
100
9,433
15.67
84.04
442
0.73
3.94
442
0.75
4.03
872
1.45
7.77
872
1.48
7.95
3.52
18.86
2,088
3.55
19.04
2,117
-
-
-
-
-
REGROUNDING (smaller part of sample *)
Pluriactivity
Conventional (smaller
part of sample *)
29,659
49.28
100
29,286
49.75
100
8,125
13.50
100
8,014
13.62
100
Total farms
60,182
100
58,867
*) only the farms of which off farm income is known = 50% of total sample)
97.81
Conventional farms, only family farms are represented, on average have a small number
of hectares (UAA). Only the group of “deepening non family farms” have a smaller
number of hectares; for a large part these are horticulture enterprises (glasshouses). In
the group of conventional farms the percentage of family labour is around the average
of around 60% all the farms. The group has a large number of dairy farms and a broad
range of other types of agricultural production, except the arable farms. The family
income is above the average of all the farms as well as the income of farmers.
Only a small number of non family farms have deepening activities. In this group the
farms have on average a small number of hectares, a large number of labour units as
well as ESU. Only 10 percent of the labour is input from the family. This corresponds
with the large number of glasshouses in this group. Also, this is a group of young
farmers. The family farms with deepening activities have an average number of around
35 hectares. The labour input of the family is more than half of all the labour (AWU)
used on the farm. The main types of agricultural production in this group are dairy,
other (non-specialised) horticulture and other (non-specialised or combinations of)
agriculture.
The largest group of all the farms is the group with broadening activities. As seen in
table 6 this group represents more than 66 percent of all the Dutch farms. Still, there are
many differences between farms from this group and the average farm. The non family
farms with broadening activities are young farmers who have the highest number of
hectares. Only a quarter of all the labour input is from the family. The number of ESU is
almost four times the average of other farms. This can also be seen in the income of the
family, which is the highest of all the farms as well as the income of the farmer. The
types of agricultural production are divided amongst all types but the dairy farms,
intensive livestock and glasshouses are the major part. The family farms with
broadening activities have a large input of family labour. The types of agricultural
production that are represented in this group are dairy farms and farms with other (nonspecialized) agricultural production.
Almost half of all the Dutch farms have an income earned with off farm labour. Still,
the labour input on the farm is more than half of the total AWU used on the farm. This
group of farms has the lowest family income from the farm as well as the income of the
farmers. The types of agricultural production most represented in this group are dairy
farms and farms with other (non-specialized) agricultural production.
Table 7: Characteristics associated to conventional and multifunctional farms
Conventional *)
non
fam.
fam.
Farms represented
Deepening
non
fam.
fam.
Broadening
non
fam.
fam.
Pluriactive *)
Total
fam.
8,014
260
10,964
532
39,470
29,286
60,102
tot_land
22.8
16.1
35.2
48.7
41.4
34.9
34.0
UAA
21.7
14.2
32.8
43.5
39.0
33.3
32.1
tot_AWU
2.28
12.96
2.66
5.96
1.98
2.18
2.19
fam_AWU
Fam/tot AWU (%)
1.42
1.35
1.46
1.51
1.34
1.26
1.32
62
10
55
25
68
58
60
144
670
141
424
129
107
125
Arable
1
6
9
6
17
15
14
Dairy
39
0
20
23
31
35
32
intensive livestock
15
0
4
25
6
8
9
Glasshouses
18
89
12
24
5
4
9
other horticulture
13
6
25
6
12
10
12
other agriculture
farm_net_i~e
(income family)
13
0
30
16
28
27
24
55,230
94,392
44,140
238,761
49,800
36,022
45,269
0
1,121
4,725
3,942
6,043
14,454
7,146
Hh_pensions
4,406
289
3,484
1,232
4,935
5,570
5,402
Hh_capital~e
rf_ulf (income
farmer)
8,373
3,068
3,832
1,718
3,457
2,410
3,830
53,966
88,227
39,990
237,179
47,489
33,285
42,326
Farmers’ age
49
44
51
45
51
*) only the farms of which off farm income is known = 50% of total sample)
49
50
ESU
Distribution of
farms
Hh_dep_lab~e
7. Conclusions
In this paper we compared the process of diversification and the multifunctional path of
Italian and Dutch farms. In the first part of the paper we clarified the main differences
between three concepts that are often and mistakenly considered synonymous:
diversification, multifunctionality and pluriactivity.
Focussing on Van der Ploeg’s categories of deepening, broadening and regrounding, we
introduced the switch from a productivist mode of production in agriculture to a postproductivist one. Looking at the multifunctionality patterns, if the sole objective of
farms is agricultural production, some externalities are still produced, but in amounts
not planned and controlled by the farmer, since costs and benefits associated to them are
not included in the farm decision process of the farmers. So, farmers become
multifunctional when the production of externalities is internalised in their decision
process and there is scope for economic values in the production of externalities.
Moving along this theoretical distinction, we subsequently tried to evaluate the
diffusion of multifunctional and diversification practises at the farm level in Italy and
the Netherlands, working on the FADN data base and trying to translate the concept of
multifunctionality into a “measurable” one according to the FADN data. This was not
an easy task, since the FADN data base still has a very productivist orientation, given its
nature and its objectives. However, it is the only micro-oriented data base
systematically gathered at the national level, so it gives the possibility to make
comparative studies between EU Member States. Moreover, FADN is continuously
evolving and it will soon include more non-productivist aspects of farms’ activities. In
addition, what can be measured by using the FADN data is diversification at the farm
level. This information can then be complemented with other sources of data to define
multifunctionality at the territorial level.
Given the productivist and post-productivist pattern described before, it is rather
difficult to draw a clear line between what is the outcome of the former and of the latter
path. For example, some typical cheese production in the Netherlands, as well as some
quality products in Italy, are definitely part of the productivist picture, although they are
assuming new features that well match the post-productivist one and the can currently
be considered within the categories of Van der Ploeg, as a process of farm
transformation into the direction of multifunctionality.
Furthermore, the exercise of comparison between countries is hampered by the
differences between national FADNs. With regard to this issue, some harmonisation,
possibly directed by DG Agri, would help and is needed for further research into this
matter.
Finally, when it comes to the results of the comparison, some differences clearly stand
out, even though it is not so clear why they exist and what they are caused by. Clearly,
there are evident institutional reasons, but also the implementation of policies is
different and could explain many of the different results. Further investigation on these
issues is a plausible agenda for the future.
All in all, the main outcomes of this paper are the following:
- the product mix offered by farm business is very complex. It includes traditional
agricultural commodities, non agricultural commodities and especially services
rapidly growing (educational, social, etc.) as well as non-commodity outputs, for
example landscape or biodiversity conservation;
- farm household resources are progressively devoted to off farm activities such as in
the case of pluriactivity or in that of land used for the production of wind or solar
energy or for storage.
As a consequence, the share of revenues from selling food and fibres is relatively
lowering, while that originated by non traditional deepening and broadening activities
is increasing. At the same time, agriculture is no longer the only and sometime not even
the dominant source of income for the farm household.
The result is that the statistical information gathered by farm surveys designed to
monitor a productivistic agriculture are not able to take into account the complex
situation defined by post-productivism and rural development. Data collection systems
have to be revised to provide a fair and exhaustive view of farm business/household
income situation and measurement.
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